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Sunglasses, Watches To Get Cheaper After GST Rate Cut, Titan Says

Titan products to get cheaper after GST council’s rate reduction. 

Sunglasses sit on display in a store in the Malad area of Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)
Sunglasses sit on display in a store in the Malad area of Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Sales of watches and sunglasses are expected to rise as they become cheaper after the Goods and Services Tax Council lowered rates, S Subramanium, chief financial officer at Titan Company Ltd., told BloombergQuint in an interview.

Earlier, lenses were taxed at 12 percent and frames at 18 percent. They will now be taxed at a uniform 12 percent. Rate on watches has been also brought down from 28 percent to 18 percent. Subramanium said he expects the prices to come down.

Watch the full interaction here:

Here are the edited excerpts of the interview:

Does GST rate reduction enable companies such as yours enable you to predict the double-digit volume growth in the third and fourth quarters?

We saw the double-digit volume growth in domestic market in the last quarter itself in the watch business. Whether we clock it (in future as well) is a different issue. But the point is this rate reduction is very good news. It makes watches far more affordable and is also a boost to the ‘Make in India’ program. I think it is a very good move. We were increasing the price because we had no option; 28 percent was very high, and we kept saying that globally, it’s the highest rate in the world. Now that they are back to 18 percent, the watches will become far more affordable.

On spectacles, there has been a rate cut.

It is a very good thing. Even for sunglasses, which were part of the 28 percent category earlier, has come down to 18 percent. In a hot country like India, sunglasses can never be looked up as a luxury. It is a necessity here and therefore bringing it down to 18 percent is very good news. The same thing happened with frames. There was confusion as frames were at a higher rate at 18 percent and lens was at 12 percent and the spectacles were at 12 percent. So, everything has come down to 12 percent now. So hopefully, the rate cuts should spur volume growth.

Is this as elastic a space and did you see the impact of price elasticity come in for you in Q1 and Q2?

I don’t know. The growth we saw in the previous quarter was not due to price because we set the prices at the same level. We didn’t change prices in the last quarter despite increase in tax rates. We have increased prices in October because it was not sustainable at the rate which we were selling. Now with the revision, we assume, that we have to get the rates down at some point and then get the demand. So, I am hoping that more affordable rates will spur demand. Let’s wait and see.

Did October saw a dip in sales?

It is too early to say it. But I don’t think sales have been impacted much so far. And secondly, it takes time for the stocks to go to the market. It took some time to reach the counters. So to that extent, the impact of that is little early to say.